Qualcomm Signs Custom AI Chip Deal with Amazon

Qualcomm has entered into a significant agreement with Amazon to develop customized silicon for large-scale AI data center infrastructure. Alongside this partnership, the chipmaker has issued a warrant to the technology giant, allowing it to acquire a stake worth up to $4 billion.

The deal represents Qualcomm’s latest strategic expansion into the data center market, following its establishment of an AI-native foundation and the acquisition of AI software specialist Modular. According to regulatory filings, the overarching agreement is linked to as much as $60 billion in potential commercial transactions between the two firms.

As part of the deal, Qualcomm issued Amazon a warrant to acquire up to 25 million shares at $161.26 each, creating a potential $4 billion stake that vests in tranches tied to specific purchase milestones. The operational core of the partnership is focused on the creation of tailored processors optimized specifically for AI inference workloads within Amazon Web Services (AWS) data centers.

By pairing Qualcomm’s expertise in power-efficient compute design with the global cloud reach of AWS, the companies aim to address the massive energy and compute requirements driven by generative AI. Beyond the customized processing hardware, the agreement also encompasses high-performance optical connectivity technologies.

Qualcomm is set to supply optical digital signal processors and serializer/deserializer products capable of reaching speeds of 1.6 Tb/s. These high-bandwidth interconnects are engineered to eliminate data bottlenecks within data center networks, facilitating low-latency communication across large clusters of AI chips.

The collaboration is reciprocal, as Qualcomm also intends to deepen its internal use of AWS infrastructure. The chipmaker will utilize cloud-based AI tools, including Amazon Bedrock, to run its electronic design automation workloads, a move intended to accelerate its own internal chip development cycles.

This agreement marks a major milestone for Qualcomm as it continues to diversify its revenue streams beyond smartphones into PCs, automotive, and cloud-scale hardware. For AWS, the collaboration on specialized silicon provides a new avenue to manage the high power consumption and escalating costs associated with running global AI services.